Chapter 13 Notes

Chapter 13 Notes - Chapter 13 The Corporate Income...

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Chapter 13 The Corporate Income Statement and the Statement of Stockholders’ Equity Performance Measurement: Quality of Earnings Issues Objective 1: Define quality of earnings , and identify the components of a corporate income statement. Quality of earnings refers to the substance of earnings and their sustainability into future accounting periods. Because of the importance of the bottom line (net income) there is a significant interest in evaluating quality of earnings. (Basically this data is useful for investors to see if the stock is over or undervalued). Quality of earnings is affected by these items: Accounting methods and estimates Gains and losses on transactions Write-downs and restructurings Nonoperating items The corporate income statement includes: Revenues Expenses Gains and losses Income tax expense Discontinued operations Extraordinary gains and losses Earnings per share When a company has BOTH __________________ and continuing operations, the operating income section is called income from continuing operations.
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The Effect of Accounting Methods and Estimates A firm’s operating income is affected by ____________ and ________________
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Chapter 13 Notes - Chapter 13 The Corporate Income...

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